Looking at these 3 fintech companies, Upstart, Sofi & LendingClub, noticed something very unusual: UPST TTM Revenue: $0.5B TTM NI: -$240M Enterprise Value: $2.7B SOFI TTM Revenue: $2.1B TTM NI: -$341M Enterprise Value: $6.1B LC TTM Revenue: $0.8B TTM NI: $37M Enterprise Value: -$2B LendingClub is the only NI+, yet it has a negative $2B EV. Am I missing something, is this a screaming buy, or do they have some deep issues or an image/perception problem? #investments #stocks #fintech
Fintechs and banks especially aren’t solely valued based on enterprise value
SoFi has the strongest fundamentals and the most diverse business among these fintechs.
I think this enterprise value is a mistake. I only see it on charts. Enterprise value is equity + debt - cash. Lending club doesn't have 2 billion in cash. Most places have their enterprise value as 100-200M. Lending Club is a bank. They have about 7.5B in deposits and hold about 6.5B on balance sheet from what I see right now. The interest on loans minus the interest on deposits for 6.5B amounts to something like 300M. If they were securitizing loans, they'd be losing money just like Upstart and SoFi. The enterprise value is still pretty low for Lending Club. I think there is a perception that maybe SoFi can really be a full service financial institution with a working website unlike the big banks whose tech is always janky and broken. Upstart is valued as if maybe this machine learning thing is real. Lending Club is valued like a small bank. I won't take a stance on whether these things are true or whether Upstart and SoFi are actually adding value via "tech", but it's not totally insane to think so. Upstart lends to a demographic that basically no one else touches with very high margins. It's currently not a big demographic and maybe you think other companies will soon serve that market too, but that shows a bit of promise. And SoFi has a mostly functional website. I bank with BoA and have a mortgage with Chase. Both don't even have properly functioning ways to easily set up autopay online. Building a bank that actually works online is not a solved problem, but maybe the incumbents will solve it before SoFi takes off. I would say the markets think SoFi and Upstart have something like a 90 percent probability of being BS, fin instead of Fintech you might say. The markets think Lending Club is pretty much just a finance company.
No innovation in LC I would not bet on LC. Too much politics with direct impact on good engineers. The consumer org is terrible to work for lays off best of the lot regularly. I was surprised to see people who got promotions were celebrated were let go. Not once not twice but thrice. CEO is not risk taker or favors radical projects. Unless CEO CTO and all VPs and directors go this company will not turn around. I am not salty because I got laid off after 2 promotions and VP telling me that I raised the bar for the entire org while laying me off. I wish all success to them but I would not invest in them. Let me give you one example: during hackathon we were given a task to provide ideas to improve stock price. Lots of legitimate ideas including serious projects did not win. A group made a parody and made the CTO Rajnikant and literally sang songs and just said Rajni CTO will improve the stock price and won the contest. It was like pissing on passionate hardworking people who wanted to make a real difference. @lendingclub BTW all blind crowd from LC have been culled so please be careful, blind might not be safe.
wow that's a shame. strictly from a balance sheet standpoint this is still interesting...cash and CE = $1.1B but current market cap = $1B.
It is cheap for a very good reason.